How Small Companies Get Listed on the Biggest Indexes

It doesn't take a finance degree to figure out how small cap companies get listed on the Russell.  They publish this information publicly, and for the most part, it's a straightforward process.

These are the four basic criteria: 

1.      Be in the top 4,000 of U.S. companies by market cap, and have market cap over 

      $30 million

2.      Trade on major U.S. exchanges – over-the-counter and pink sheets excluded

3.      Meet Russell's growth and price-to-book style criteria

4.      Have a minimum $1 stock price at the end of May

Every year, thousands of small cap stocks vie for what turns out to be hundreds of spots on the Russell. The trick in picking the winners isn't any more difficult than knowing the above four criteria and going through each possible candidate to find the companies with the best chances.

So why don't more people do it? Because it's time consuming, and takes a lot of attention to detail that most people don't have the time or energy to muster.

But it can be extremely profitable if done correctly.